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Safeguarding my home mortgage

Use life insurance as mortgage protection to safeguard your home

Owning your own home has not long been a part of the American dream, but it also can create considerable anxiety.

New York Life can help alleviate some of the worry that comes with ownership. There's always the concern that your family will face difficulties paying off the mortgage in the event that you become disabled* and cannot work, or suddenly die.

This is why many mortgage contracts include a clause that states, “At the death of any signer, the contract is subject to renegotiation…” The loss of an income can lead to foreclosure. That's why a number of banks and mortgage companies encourage homeowners to purchase mortgage protection insurance (PMI), especially if your down payment is less than 20% of the home's price. Another option for safeguarding your mortgage is personally-owned life insurance.

PMI is usually issued by a bank or mortgage company. You pay a fixed premium for a certain number of years to cover the risk of foreclosure. Should something happen to you while the policy is in effect, the insurance pays the remaining mortgage. The loan typically lasts for the life of the mortgage. As you pay off your mortgage, your end benefit goes down, too. At the end of the policy, the benefit is zero.

Personally-owned life insurance offers a different option. It is issued by a life insurance company and gives you greater control. Essentially if you pay the premiums, your family receives the death benefit—and the right to decide what to do with it.

Also, personally-owned life insurance is portable. This means if you move in a few years, you won't have to replace your insurance. This can save you a great deal of money since insurance rates usually increase as you get older.

New York Life Insurance Company offers a variety of insurance products that can help ensure your family's financial security—even after you've gone. Types of insurance whose death benefit can provide mortgage protection include permanent life insurance, and term life insurance. Permanent Life Insurance: A term used to describe various life insurance policies in force throughout an insureds lifetime provided premiums are paid. Permanent Whole Life is a type that allows you to accumulate a cash value that can help pay off your mortgage via policy loans**. If purchased in an adequate amount, the death benefit can be used to help retire the mortgage as well as help your family solve other financial concerns.

To find a Local New York Life agent who will be happy to discuss your life insurance needs, click on the talk to us.

* Disability insurance products available through one of more carriers not affiliated with New York Life, dependent on carrier authorization and product availability in your state or locality.

** Policy loans accrue interest and reduce cash value and death benefit.

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All comments are moderated by New York Life and will not appear on this story until after they have been reviewed and deemed appropriate for posting. Opinions expressed in posts are those of the respective authors and do not represent the official position of New York Life.